WASHINGTON, July 10 (Reuters) - A $200 million shortfall inclient funds at U.S. brokerage PFGBest has turned the heat upagain on the U.S. futures regulator, less than nine months afterMF Global's spectacular failure left its customers short morethan a billion dollars.

The Commodity Futures Trading Commission (CFTC) filed suitagainst Iowa-based Peregrine Financial Group Inc and ownerPFGBest on Tuesday, a day after the firm told customers theiraccounts had been frozen after an apparent suicide attempt byits chairman, Russell Wasendorf.

The lawsuit alleges the firm misappropriated customer fundsfor more than two years and lied to regulators. But industrygroups, lawmakers and regulators themselves are asking whetherthe CFTC is doing enough to police the market and restoreconfidence in the shaky futures industry.

"It is absolutely imperative that there is accountability inthe futures markets so customers can feel safe knowing theirmoney is protected," said Democratic Senator Debbie Stabenow,chairwoman of the agriculture committee, which oversees theCFTC.

"Congress also has a responsibility to assess currentcustomer protections and strengthen them where needed to put astop to executives misusing customer funds in the future."

On Tuesday, she announced the committee will hold hearingson July 17 and August 1 to question regulators, reform advocatesand industry groups about progress on swaps and futures marketreforms. Gary Gensler, chairman of the CFTC, is slated to appearon July 17.

SELF-REGULATION

Similar concerns about futures oversight were voiced when MFGlobal filed for bankruptcy on Oct. 31 after investors andcustomers became rattled over the firm's multi-billion dollarbet on European sovereign debt and downgrades by credit ratingagencies, resulting in a liquidity crunch.

An estimated $1.6 billion in customer funds went missing,lost in MF Global's final days.

In January the CFTC and the National Futures Association(NFA) conducted an industry-wide review of the 70 largestfutures commission merchants to reassure futures customers. TheCFTC said it found no "material breaches of customer fundsprotection requirements," leading many to question thethoroughness of the review.

On the sidelines of a CFTC meeting on Tuesday, Gensler wasquick to point out that the check was conducted by the NFA anddid not constitute a full-blown audit.

The NFA is the industry's front-line regulator.

When asked whether the unnoticed shortfall should raisequestions about the "self regulatory" model that allowsorganizations like the NFA to police futures brokers, Genslersaid the CFTC's limited funding made it hard to avoid.

"It's the nature of our funding as well. We rely on the NFA,CME and others to be the first line of oversight of futurescommission merchants," Gensler said, using the term for futuresbrokers.

DEJA VU ALL OVER AGAIN

Gensler also pointed to key reforms put in place by the CFTCsince MF Global's demise.

The rule, which went into effect in February, had been setback because of fierce lobbying by industry representatives,including Jon Corzine, former CEO of MF Global.

New CFTC rules that come into force in November will requiremargins to be held customer by customer, making it potentiallyeasier in the future for customers to bail out of companies thathave MF Global-style disasters.

New rules for swaps, finalized in January, allow brokers topool customer collateral, but would require them to keepseparate records of the cleared swaps of each individualcustomer and relevant collateral.

The CFTC is looking at applying that model to futures.Current CFTC rules allow futures brokers to commingle the fundsof one futures customer with money belonging to others in asingle account or accounts.

But many say the current schedule of reforms do not go farenough.

"Futures customers should be protected like banking andsecurity customers are protected," Democratic CFTC CommissionerBart Chilton said on Monday.

Chilton has said he prefers a tack similar to the one chosenby European regulators, which gives customers the option ofvarying levels of segregation.

He also supports the creation of a fund for futurescustomers similar to the Securities Investor Protection Corp,which guarantees customer investments up to $500,000.

In the wake of the MF Global collapse last year, exchangeoperator CME Group set up an insurance fund that covers farmersand ranchers for up to $25,000 and cooperatives for as much as$100,000 when a clearing member fails.

Many reform advocates, including MF Global trustee JamesGiddens have pushed for a futures equivalent.